(Reuters) - Hard disk drive maker Western Digital Corp (WDC.O) said it would buy Stec Inc STEC.O for about $340 million in cash to beef up its solid-state drive business.
The offer of $6.85 per share represents a 91 percent premium to Stec’s closing share price on Friday.
The money-losing Stec, which makes solid-state drives that are faster and costlier than traditional magnetic drives, has lost market share in the highly lucrative but cut-throat market.
Its co-founder, Manouch Moshayedi, resigned as chief executive in September over insider trading charges.
One of Stec’s biggest shareholders, Balch Hill Capital, which holds 9 percent of the company, said in December Stec should consider selling itself to a larger industry player.
Balch Hill also said Manouch Moshayedi and his brother, Mark Moshayedi, should resign from the company’s board.
Mark took over as the interim CEO when his brother resigned.
Stec’s revenue has been declining since 2011 and halved in the first quarter this year from a year earlier. The company’s stock has also halved this year.
The sale is expected to close in the third or fourth quarter of 2013.
Wells Fargo Securities LLC is the financial adviser to Western Digital while BofA Merrill Lynch advises Stec.
Stec’s shares closed at $3.59 on the Nasdaq on Friday, while those of Western Digital closed at $60.19.
Reporting by Chandni Doulatramani in Bangalore; Editing by Don Sebastian